Governments in Europe knew they were taking a massive step when, forced by circumstance, they agreed to various bank bailouts to stabilise the financial system in the wake of the 2008 global financial crisis.
These measures, of course, proved just a stopgap solution. In sum, accumulated debt and systemic risk were not reduced. They were simply redistributed, transferred from one balance sheet to another, with the effects of those decisions played out in Europe's sovereign debt crises, and the belated attempts to re-establish fiscal control.
These events, which now have such a bearing on the future working of the world economy, were the subject of the latest Hong Kong University of Science and Technology (HKUST) and New York University Stern School of Business (NYU Stern) Global Finance Seminar which addressed the causes, consequences and possible remedies to the debt crisis. The event, held in early December last year, was co-presented by the South China Morning Post, Bloomberg and JPMorgan.
Assessing how to stop Europe 'drowning in debt', keynote speaker Viral Acharya, professor of finance at NYU Stern, outlined - with particular reference to Ireland - how bailouts for the financial sector had 'ignited' sovereign credit risk in supposedly developed European economies.
The result for governments prepared to step into the breach was perhaps foreseeable. By providing funds or guaranteeing deposits for distressed private sector banks, they faced up to the inevitable, but they were, in a sense, entrapped.
The primary goal, from the standpoint of stabilising the financial sector, may have been met. Be this as it may, the question which still has no definitive answer is: at what cost to individual nations, the euro zone, and other international institutions?